Abolish the FDA by Jim Grichar
The time has long since come for the Congress to abolish the U.S. Food and Drug Administration, also known as the FDA. Contrary to the baloney put out on the various pages of its web site, which would lead the unwary taxpayer into thinking that the FDA is actually protecting him or her from some hazard, the FDA has outlived any usefulness its partisans and bureaucrats have claimed for it. Getting rid of this bureaucratic dinosaur would save taxpayers nearly $1.7 billion (the proposed fiscal year 2004 budget), lead to reductions in the prices of food and drugs paid by consumers, reduce lawsuits over product liability, and reduce the number of lives lost and lives shortened due to a lack of drugs and medical devices.
What the FDA claims to do
With a history that dates back to 1848 when Congress required the U.S. Customs service to prevent adulterated drugs from entering the United States, Congress has expanded the FDA’s regulatory authority over food and drugs over the years, all in the name of protecting consumers from any risks associated with food, drink, or drug use. Major milestones (or millstones, for taxpayers and consumers) include the Food and Drugs Act and Meat Inspection Act, both of 1906, which gave the FDA’s predecessor agency power to enforce prohibitions on the interstate commerce of misbranded or adulterated food, drinks, and drugs.
While many of the food-related functions have been transferred to the Agriculture Department, the FDA retains considerable authority in this area, notably in dictating food-labeling standards and in dictating the types of claims that can be made by manufacturers of vitamins and mineral supplements.
As far as prescription drugs go, the FDA has been given additional authority over the years. Notably, in 1962, after the sleeping pill thalidomide was found to have caused birth defects in children born in Western Europe, the Congress passed and John F. Kennedy signed into law amendments to federal drug laws that required pharmaceutical manufacturers to prove to the FDA the effectiveness of their products before marketing them in the United States. Despite the apparent Congressional intent of reducing the risk of using pharmaceuticals to zero, unsurprisingly, the FDA has failed to do so. Instead, FDA began the process of dictating standards for clinical drug trials and tests and conducting a lengthy approval process that a manufacturer needed to pass before bringing a new or modified drug to market.
Beginning in 1976, the FDA was given authority to apply a similar "drug-style" approval process to all medical instruments and medical test equipment.
The FDA has failed
This attempt by the government to insure consumers against the risk of using drugs and medical devices has flopped on numerous occasions. First of all, FDA regulations have often prevented U.S. consumers from gaining access to new life-saving drugs. Examples of this include major delays in the marketing of drugs used to treat cancer, blood pressure, heart attacks, cholesterol, and strokes and delays in marketing such high-tech items as cardiac pacemakers and in the use of such techniques as balloon angioplasty for blocked coronary arteries. For many years, the FDA would not allow the makers of aspirin to claim on their product labels that aspirins thinned blood and could thus save one from dying if taken during a heart attack. The costs of FDA regulation of these markets has likely run into the billions, possibly hundreds of billions, of dollars and is composed of higher drug prices, fewer drugs, and more and lengthier illnesses and earlier deaths.
In a call to the Bush Administration to merely reform the FDA, Henry I. Miller, a fellow at the Hoover Institution and the Competitive Enterprise Institute and a former FDA official, presented a devastating critique of the FDA’s regulatory process and procedures.
In his early 2001 editorial commentary, Dr. Miller stated that the total time it takes to develop a new drug had doubled since the 1960's. And the costs to a manufacturer of bringing a single new drug to market had risen to over $400 million, the highest cost in the world. He further contended: "Costs are spiraling out of control because the FDA meddles endlessly in clinical trials and keeps raising the bar for approval." Furthermore, he cited statistics that showed the average number of clinical trials per average drug increased from 30 in the early 1980's to 68 during the 1994–95 period while the average number of patients in clinical trials for each drug more than tripled! As expected, the average time required for clinical trials for a new drug rose from 85 months in the first half of the 1990's to 92 months in the last half of the 1990's.
And FDA approval of a drug has not been a guarantee that one was or is using a safe drug. This latter contention was once again confirmed in a Sunday, May 18, 2003 New York Times article about trial lawyers focusing their efforts on launching mammoth lawsuits against pharmaceutical manufacturers.
Life without the FDA
While many in the medical community like Dr. Miller believe that sensible regulatory reform of the FDA should be the goal, instead the FDA should be abolished.
Some – possibly many – are about to ask me: "Grichar, are you nuts? What makes you, an economist and not a medical expert, think that the drug companies and medical equipment manufacturers can be trusted to regulate themselves!" To which I would respond, "They will not be regulating themselves; the free market will regulate them."
And here is how that could be done. In the absence of the FDA and with trial lawyers looking for multi-billion dollar settlements in lawsuits, pharmaceutical manufacturers and medical equipment manufacturers have every incentive to be cautious in bringing out new drugs and new medical devices. To this end, they would avail themselves of independent private reviews of the results of clinical trials and tests.
Medical experts – the same ones who testify on behalf of and against manufacturers in various product liability lawsuits – would also become involved as independent private review consultants. Most likely, such experts would become affiliated with independent private review institutes – similar in operational philosophy and techniques to the famous Underwriters Laboratories – which would levy a charge for a review of a new drug or medical device. Currently, the FDA takes in about $250 million annually in fees (really taxes) it charges manufacturers for seeking approval of a drug or medical device. Manufacturers have thus demonstrated the willingness and ability to pay for product reviews.
Insurers might also help fund such independent review boards or institutes, as this would help lower their pay-outs in lawsuits. And contrary to what some may think, medical experts would have every incentive – mainly significant future earnings from participating in drug and medical device and procedure reviews from the independent review institutes – not to take bribes from manufacturers. (For a great description and analysis of what of Underwriters Laboratories does, see What Keeps Us Safe by Mark Thornton.)
If given a seal(s) of approval by accepted review institutes, the new drug or device would be brought to market with that seal(s) publicly displayed. Physicians, who often have to spend a fortune for malpractice insurance coverage, would have the strongest incentive to prescribe, in most cases, only those drugs or those devices that have some seal(s) of approval. Their malpractice insurer would demand that. However, physicians would be free to seek an exemption from their insurer and the consumer in cases where application of a new, but not-yet mass marketed or reviewed drug or device, might make the difference between life and permanent disability or death.
Manufacturers would also be given an extra incentive to seek such expert seals of approval for their new drug and medical device products by their insurance companies, mainly in the form of lower premiums for liability insurance if they get a seal(s) of approval. Those not getting recognized approval would face higher liability insurance premiums, possibly suspension of coverage for those particular products, and likely lower demand for such products. Getting a number of seals of approval, from these strictly independent private review institutes, would further enhance the marketability of a product and help insulate the manufacturer from lawsuits.
Under the free market, insurers would also have the incentive to offer consumers no-fault liability insurance for medical malpractice, including the use of drugs and devices that have not gotten a major seal or seals of approval by generally accepted review institutes. And consumers would have a strong incentive to purchase such insurance.
With such a private market system of insurance and risk reduction, there would be fewer lawsuits and lower settlements. This would be the case because of the extensive and competitive review of products, seals of approval, and also review by various insurers. It would be difficult for even the best trial lawyers to counter numerous expert opinions rendered in such an unbiased manner prior to the sale of a specific drug or medical device.
Dump the FDA!!!
To sum it up, a private market for the review of drugs and medical devices could save the public billions of dollars. Not only would the public (including drug and medical device manufacturers) save the $1.7 billion it pays in taxes and fees to fund the FDA, but effective drugs and devices would be brought to the market more rapidly and at a lower cost. More lives would be saved, there would be fewer permanently disabled, and illnesses would be shortened. Lower lawsuit awards and settlements would more than likely compensate for any extra costs of reviews.
Abolish the FDA and save lives and money!
